Is Diagnostics the New Biotech...and Will Pharma Embrace It?

The early biotech industry thrived on a combination of hope and hype while diagnostics, which evolved using many of the same tools, was traditionally viewed -- and priced -- almost as a commodity. Now we're seeing the advent of complex, high-value diagnostics. As the techniques underlying tests increase in their biological complexity and the knowledge base of their developers about specific disease areas deepens, is the value proposition becoming more biotech-like?

During a meeting at her office last February, the CEO of a next-generation diagnostics start-up suggested that high-value diagnostics companies are "the new biotech." Her argument: the field is facing many of the same adoption challenges as the biotech industry did in its early days. The thought resonated on a common-sense level. The underlying technologies defining biotech medicines and diagnostics are similar; in fact they had common starting points, first with the use of antibodies as targeting agents and probes, and later with genomics. In both cases, the same core assumptions existed around using those tools to unlock the power of the biological perspective. Biotech faced an initial hurdle of developing efficient and reproducible manufacturing processes for production scale-up; diagnostics, similarly, needed to automate. And in each case, there was a need for physicians, potential development partners, and regulators to get their arms around a unique and innovative set of promising technologies.

The conversation with the diagnostics CEO led to another, with Risa Stack, PhD, a partner at Kleiner Perkins Caufield &...

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